KATHY GERSCH, DRUGSTORE.COM

Transforming a Tech Company Into an Online Retailer

The average consumer spends $2,000 every year at her local pharmacy. Drugstore.com wants a mere 10% of that take, and Kathy Gersch’s job is to see that the 6-year-old company gets it. After less than a year at the e-tailer, she appears to have that goal firmly within reach.

Ms. Gersch joined Drugstore.com in December 2004 in the newly created post of vice president and chief marketing officer and general manager. She’s charged with advancing toward the goal of Dawn G. Leopore, chairman and president-CEO, to transform what was once a technology-focused company into a true retail establishment -- albeit an online one.

A changing focus
In fact, it was this changing focus that earned Ms. Gersch her position. Ms. Gersch’s online and retail background was a good fit for Drugstore.com, Ms. Leopore says. Ms. Gersch had already held the titles of executive vice president for marketing, merchandising and business development at Giftcertificates.com and vice president of finance, strategic planning and administration for Nordstrom.

Ms. Gersch, 36, is tapping into that experience as she helps grow the company’s over-the-counter business, which climbed by 40% in 2004. And the Drugstore.com marketing chief will borrow from her Nordstrom days as she moves to improve customer service at the site, which has yet to see profitability.

A gift to boost sales
One of the first innovations Ms. Gersch implemented was a permanent gift-with-purchase program that has already increased shopping basket sizes. Today, the average Drugstore.com customer spends $187 annually on the site, shopping there 2.3 times a year. With 26% growth in the first quarter vs. a year earlier, reaching the $200 annual target for customers appears a certainty.

“We now have manufacturers clamoring to participate, clamoring to be that eyebrow on the side of the page,” Ms. Gersch says. “It’s attractive for the customer and the vendor partners. Customers love getting full-size samples, and vendors get a chance to sample all of our customers.”

Ms. Gersch knows a little bit about those customers because she herself fits into her company’s target demographic -- a hip, young working mom. Two-thirds of Drugstore.com’s 5.65 million customers are female, and many fit the same profile as Ms. Gersch, who’s married and has four children, aged 1, 2, 5 and 7. She knows that if something works for her, it’s probably going to work for her customers.

Launching a broad campaign
This year, the company will launch a broad marketing campaign -- the first in five years -- to fill customers in a bit more, she says. Acme Idea Co. handles creative, and Omnicom Group’s OMD, San Francisco, handles media.

“Anytime you go through a major rebranding initiative, the consistency that you roll out in is critical. [The brand] touches everything from how the customer-care folks answer the phone to how the site looks to how the merchandising looks,” Ms. Gersch says. “Our customers are going to start seeing that in the third and fourth quarters.”